Keir Starmer looks set to stop short of retaliating to Donald Trump‘s tariffs despite No10 admitting the UK will not be spared pain.
The PM is gathering Cabinet on the eve of the US president’s so-called ‘Liberation Day’ – when he has vowed to impose huge levies on imports from around the world.
Britain has been frantically trying to negotiate a deal to dodge the tariffs, but Business Secretary Jonathan Reynolds acknowledged this morning that there will be ‘no exemptions’ initially.
There are claims that Mr Trump snubbed an invite from Sir Keir to visit the UK in June and sign a package.
However, ministers are still hoping that an agreement can be reached in the coming weeks, with possible concessions on taxing tech firms.
The prospect of a trade war triggering a recession has been causing near-panic on global stock markets, although there has been a less febrile atmosphere overnight.
Keir Starmer looks set to stop short of retaliating to Donald Trump’s (pictured) tariffs despite No10 admitting the UK will not be spared pain
Last week the Treasury’s OBR watchdog modelled a scenario of the US imposing 20 per cent tariffs on all imports, with equivalent retaliation, warning that it would spark an inflation surge and wipe 0.6 per cent off growth this year and 1 per cent in 2026-27
The US president has seemed to be leaning towards a ‘big bang’ global tariffs, although the exact shape of the policy remains unclear hours before it is due to be implemented.
Last week the Treasury’s OBR watchdog modelled a scenario of the US imposing 20 per cent tariffs on all imports, with equivalent retaliation, warning that it would spark an inflation surge and wipe 0.6 per cent off growth this year and 1 per cent in 2026-27.
Sir Keir has been arguing that trade between the two countries is already balanced.
However, he has already failed to head off tariffs on steel. Downing Street gave another gloomy hint yesterday by saying talks are expected to continue beyond tomorrow.
No10 has stressed that retaliating with extra duties on US goods such as Jack Daniel’s whiskey, Harley Davidson motorbikes and Levi’s jeans is on the table.
But there have been strong hints that the government will hold fire, with the PM’s spokesman making clear ‘a trade war with the US is clearly not in anybody’s interests’.
‘We continue to have constructive discussions on agreeing a deal with the US, but at the same time, we’ve also been clear that all options are on the table, we obviously reserve our right to respond, to protect our protect our industries.
‘But we want to take a calm and pragmatic approach to this.
‘I think British industry has also been clear that they want to see the Government having a dialogue with the United States and that’s what we’re going to continue to do and seek to achieve,’ the spokesman said.
Touring broadcast studios this morning, Mr Reynolds said he believed there would be ‘no exemptions’ for any country, but added that what the US is trying to achieve has ‘jumped around’.
The PM is gathering Cabinet on the eve of the US president’s so-called ‘Liberation Day’ – when he has vowed to impose huge levies on imports from around the world
He said food standards were a ‘red line’ in trade talks but did not deny that dropping or reducing the digital services tax for US businesses was on the table in negotiations.
Mr Reynolds said that although a tech tax was an ‘important principle’ there were questions about ‘how we achieve that’.
‘We’ve always wanted to reach that on an international basis. I mean, digital services tax, in itself, was a temporary imposition in lieu of a wider international agreement,’ he said.